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Hi sir, If I received some cheques from some clients in September, I would debit the bank and credit the Receivables but I never lodge those cheques until October. Is those cheques recorded as cash in hand on the balance sheet? Or they are still apart of the bank but is recorded is added as outstanding lodgement on the bank reconciliation
John Moffat says
The cheques are entered in the cash account as received when the cheques are received. If they have not yet been paid into the bank, then they also appear on the reconciliation statement as outstanding lodgements.
Thank you sir, that is what I know and the auditor is telling me that they are cash in hand because they weren’t lodge until the following month. Thank you so much again.
And I know for a fact that cash in hand refers to coins and notes (paper money).
In the financial statements we normally don’t show cash in hand and cash at bank separately.
With regard to what the auditor has told you – that is correct and is what I wrote in my previous reply.
The cheques received are entered in the cash amount when they are received and therefore do appear as an asset in the financial statements. If they have not been paid into the bank then they also appear on the bank reconciliation statement, otherwise the cash balance will not agree with the bank balance.
Have you watched the further lectures on bank reconciliations?
Yes sir I did. However, the auditors do show Cash in Hand different from Cash at Bank on the balance sheet. Hence why I am saying it shouldn’t be shown as cash in hand because they use the cash in hand only for the petty cash.
Fair enough, although it is irrelevant for the exam 🙂
Thank you so much sir for understanding. I do appreciate this and thank you for allowing me to understand too. I’m taking this exam in December.
Sir is credit transfer credited in the cash book balance or not?
If it is a payment by credit transfer then yes – we credit cash.
It is a receipt by credit transfer then we debit cash.
(The word credit in credit transfer is nothing to do with debits or credits – it is just another word for a bank transfer)
right Sir but if question does not mention if it is payment or receipt so how will we treat credit transfer ? because i have been doing questions which do not mention of it being either payment or receipt
Exam questions will make it clear.
Thank you 🙂
Sir, I just had a general question from this lecture. What is a Journal entry for payment of electricity bill through credit card? Do you open a new account for credit card or Credit bank account?
Assuming that the credit card is one that sends a monthly statement to pay, then you would credit an account for the credit card. (Some credit cards take the money directly from your bank account, in which case you would credit cash).
However, as I do say in the lectures, credit card transactions are not examined in Paper F3. The reason is that we are looking at businesses, and although some businesses do use credit cards, in most cases they are used by individuals (who might then claim from the business).
Just found the reason to be confident of finally getting going with ACCA. Great, engaging Lecturer. Excellent for self study 🙂
Sir, i have a doubt. The Foll. is a T- account- capital a/c. What should i understand when income statement is 400 and how do I know when to write this?
Capital a/c Drawings 100 Cash 5000 Income Statement 400 Balance 5300
In future please ask questions in the Ask the Tutor Forum – not as a comment on a lecture about something completely different 🙂
In the exam you can not be asked to prepare t-accounts – sometimes they are useful in your own workings, but that is really all. The amount owed to the owner (the capital) increases due to any profit (from the income statement) and decreases due to any drawings. That is all that is happening here. You should watch the lecture on chapters 2 and 3 of the Lecture Notes where this is all explained.
thanks so much Sir. I will make sure that qns are asked in the right place. 🙂
i would like to buy lecture videos for F4 to F7 for December session,and use course notes from open tuition.
kindly advise if i can buy.
Our lectures are free of charge, but can only be viewed online.
it realy helps thanks
Where was this lecture done?
love the lecture!
i have problum in solving bank recuncilation
thank you sir
so funny and interesting
Absolutely loved your rant about the cheques in Lithuania and the the American spelling of cheque! Bravo sir!
Thank You Very Much 🙂
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